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Due Diligence

Due diligence is the process of analyzing a company’s activities from a legal perspective. It can be either comprehensive or specific to a particular agreement. The purpose of conducting this examination is to identify potential risks that could cause harm to the company (sanctions for violations of legal requirements, failure to fulfill contractual obligations, claims from regulatory authorities, etc.). The result of such evaluation may involve the independent rectification of violations already committed by the company, the implementation of measures to prevent their recurrence in the future, and the reinforcement of legal protection in «vulnerable» areas within the overall structure of the organization.

Due diligence of corporate structure

The vector of such examination lies in the inspection of:

  • constitutive and registration documents. The initial verification of the articles of association and foundation agreement should be conducted by the registrar before entering information into the Unified State Register of Legal Entities and Individuals-Entrepreneurs for registration. However, on a practical level, there are many cases where founding documents do not comply with the requirements of current legislation. Additionally, registration documents themselves may contain inaccuracies (errors, typos, etc.);
  • decisions of the governing bodies. Special attention is given to the procedures for conducting various meetings where decisions are made, and the correctness of maintaining the minutes of meeting and other documents is verified;
  • materials accompanying operations involving the alienation or acquisition of shares, other assets, corporate rights, etc.;
  • documents confirming the representation of the company in relevant authorities with a clearly defined scope of authority.

Due diligence of labor relations and civil law agreements: 

  • examination of civil law agreements, work/service completion certificates, employment contracts, memoranda, to assess their compliance with current legislation. In the review, particular attention is given to ensuring that civil law agreements do not contain elements indicative of employment relationships (subordination to internal rules, labor remuneration, etc.);
  • overall assessment of the organization’s personnel management, including the presence of relevant orders for hiring, transfers, dismissals, imposition of disciplinary measures, conducting internal investigations, etc.). This involves identifying and preventing potential conflicts, detecting violations in the field of labor relations, and providing effective recommendations to minimize economic risks.

Overall analysis of corporate assets:

  • verification of documentation for the acquisition of securities;
  • purchase of fixed assets, including movable/immovable property, to identify any violations in agreements with counterparties, acquisition of property for ownership/use;
  • presence of encumbrances on movable and immovable property;
  • assessment of the efficiency of asset utilization and determination of the economic attractiveness of fixed assets, development of methods and approaches to enhance these indicators for potential disposal.

Approval documentation: 

  • legal assessment of the organization’s functioning in terms of necessary permits (compliance of licenses with types of economic activities, their validity periods, justification for obtaining new documents or renewing the existing ones, legitimacy of refusals to issue permits, and analysis of reasons for refusal), and compliance with competition law.

Due diligence of relations with state authorities:

  • determination of the current state of relations with authorities (supervisory, registration, fiscal entities, state funds, etc.);
  • identification of ways and methods to address existing legal violations;
  • assessment of the likelihood of legal disputes involving the Client;
  • provision of recommendations for solution approaches, loss minimization, and effective support in the execution of court decisions.

In summary, our due diligence services include a legal review of the company’s history, management and personnel systems, property audit, commercial activities, contractual practices, and much more.